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Airgas has weathered the recession's storm

Posted Oct 13th 2009 3:45PM by Joseph LazzaroJoseph Lazzaro RSS Feed
Filed under: Stocks to Buy

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So far, the June Buy call for Airgas (NYSE: ARG) is performing better than expected. Institutional investors have looked past near-term sluggish revenue to projected brighter quarters in FY2010, hence I'm Reiterating my Buy rating for the company, first recommended on June 24, 2009 at a price of $39.89. If you bought ARG then, you're up about 22%.


True, Airgas is no longer viewed by IIs as a recession-proof play, but the company's value-added remains compelling – one that boasts a strategic advantage: Airgas is the U.S.'s largest distributor of packaged gases and welding, safety and related products, with an average market share of about 25%. The First Call FY2010/FY2011 EPS estimates for ARG are $2.78 to $3.20.

Technically, ARG's stock chart is strong: an uptrend, with only minor, constructive corrections, and the stock has only briefly breached the 50-day moving average. There will be psychological resistance at $50, but the stock has already tested that level. More-cautious investors, however, should wait until ARG closely above $50 for three straight days.

Stock Analysis: Airgas Inc. is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in ARG now; then buy another 25% in one month, if U.S. economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your ARG position before December 2009. Sell/Stop Loss if you were to buy shares in this company: $24.

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

Tags: Airgas Inc., ARG

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Last updated: November 22, 2009: 03:57 AM

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